For the travel & hospitality industry, as well as for most consumers, a spigot was turned off in March 2020. Travel ground to a halt while brands quickly adjusted operations and marketing to battle an almost total absence of demand. T&H marketers saw a rocky recovery and were deeply concerned that business may not ever return to pre-pandemic levels. Further consolidation in these markets is anticipated, which may lead to fewer options and higher price for the consumer.  

Short-term, consumer sentiment will be driven by pandemic concerns, so brand credibility and safety assurances are paramount. Longer term effects will be revealed as mindsets change regarding redefined travel habits (e.g. shift to more local travel), social responsibility and sustainability. 

Pushing new boundaries & banding together

T&H companies have completely reimagined their business models. Hotels became real estate companies while airlines became logistics companies as consumers’ shifting sentiment created varying demand. Companies creatively generated additional cash flow with buy now/redeem later options, flexible cancellation policies and retail options for credit card rewards. Accor Hotel transformed into a co-working space while Airbnb’s “Go Near” campaign highlighted attainable domestic travel and affordable monthly rentals.

Marketing shifted from selling the promise of adventure and fun to guaranteed cleanliness and safety procedures as key-selling points. United Airlines partnered with Clorox in an unlikely pairing to create practices and messaging around cleanliness to reassure customers at a critical time. Hotels in China (Dossen, Huazhu and New Century) offered contactless service to limit physical interaction and time spent in public areas. Additionally, Delta supported consumers by quickly suspending change fees, reducing aircraft capacity and upgrading hygiene standards.  

2021: The year of local travel 

While return to travel may be slow, T&H has begun to see a shift in consumer behavior. Even in times of trouble, trends show that wanderlust is still alive and well. National parks and outdoor destinations are faring better than most, and in some instances, thriving. Domestic flights are beginning to rebound with Gen Y and Z starting to book again.    

The blurring of work, personal and leisure lifestyles may lead to major changes in T&H. Adoption of new workplace technology and adjustments in habits and flexibility have created new expectations for remote working, meaning that business travel will most likely take longer to rebound. United Airlines is predicting it will take up to four years to return to pre-COVID levels. However, work from anywhere could lead to reimagining the future of the workplace and workcations could become more common.

International travel will most likely not see a resurgence in the coming year, and when flying, travelers can expect additional layovers due to reduced flight schedules and fewer opportunities to fly direct. But car rental companies may recover sooner than the rest of T&H due to an inclination toward local travel. 

The 2021 playbook for  recovery & sustainable growth

• Communicate empathy and transparency. Loyalty will become paramount as travelers feel safer returning to a location that they are familiar with, especially if flexible traveling is guaranteed. Encourage repeat customers by providing exemplary experiences and worry-free scheduling.
• Accelerate tech adoption and innovation. Digital transformation will help your brand focus on media and granular geo-targeting for customers interested in staycations and weekend getaways within driving distance or short flights. Transforming your digital platform informs yield management and pricing decisions that enable better revenue management and margin optimization. Leverage identity and decision-making platforms to serve the next best action to meet customers where they are.
• Battle travel anxiety with information. Be mindful of local quarantine restrictions and shift marketing accordingly. Enable travelers by helping them understand destination availability. Provide information regarding local pandemic procedures, amenity availability and closures, entertainment options and state requirements regarding travel.
• Re-assess your audience. Reevaluate customer strategies as previous customer segmentations are no longer applicable. Frequent business travelers and college students who fueled revenue now have very different behaviors. Additionally, the traditional holiday calendar is no longer reliable for increased bookings. However, many workers and students may be looking for a change of scenery in a nearby destination. Leverage dynamic research tools, including social listening, to keep a continuous pulse on consumer sentiment and needs.
• Explore new opportunities. Consider new campaigns including solo travel and creative retreats. Responsible tourism is now a customer priority, so travel and hospitality brands must take action to make sustainability a top concern when planning for the future.  

Contributors 

• Raig Adolfo, Chief Strategy Officer, 360i
• Coleen Kuehn, EVP, General Manager, Travel & Hospitality Practice, Merkle
• Ana Leao, Managing Director, Isobar Brasil
• Aloisio Pinto, SVP, Chief Strategy and Product Officer, Isobar. U.S.
• Jamie Shuttleworth, U.S. Chief Strategy Officer, dentsumcgarrybowen